Infosys signs revenue-sharing agreement with IPsoft

Infosys entered into a partnership with IPsoft as part of the company’s strategy of pushing up business volumes at the cost of profit margins. Photo: Bloomberg

Updated: Wed, May 01 2013. 12 26 AM IST

Bangalore: Infosys Ltd has signed a revenue-sharing agreement with IPsoft Inc., which uses software robots to replace human engineers, as part of the Indian company’s efforts to cut costs and gain more business from big clients that are adopting a pay-per-use billing model to reduce expenses.

As part of the partnership, the companies will establish a centre to train employees on the deployment of US-based IPsoft’s automation platform IPcenter at Infosys’s Mysore campus. India’s second largest software exporter said it plans to train about 5,000 employees in the next few months.

The move comes at a time when Indian software exporters are struggling to boost revenue and some top clients are beginning to separate project fees from the number of engineers deployed in an outsourcing project.

“Autonomics-driven services can bring to IT (information technology) support and maintenance the kind of productivity gains that robotics brought to the manufacturing industry,” Chetan Dube, chief executive of IPsoft, said in a statement.

Infosys entered into a partnership with IPsoft as part of the company’s strategy of pushing up business volumes at the cost of profit margins, Mintreported on 31 March.

“As such, this partnership is important for Infosys because it will support the company’s non-linear strategy. But to me, the real innovation will come from expanding such automation technologies to application management and BPO (business process outsourcing) delivery capabilities,” Fred Giron, principal analyst at Forrester Research Inc., wrote in a blog post.

Automation has generally been seen as a threat to India’s $108 billion IT sector, as software robots made by companies such as IPsoft can automate and deliver IT projects at a cost that is less than a quarter of the billing rates of engineers from top firms such as Tata Consultancy Services Ltd and Infosys. This has forced the likes of Infosys and Wipro to partner with companies like IPsoft to avoid losing existing and new projects to the new model.

One of every four IT projects is expected to be automated in the next three years, according to technology researcher Gartner Inc.